Qualcomm 2006 Annual Report Download - page 63

qualcomm 2006 49
On November 7, 2005, we authorized the repurchase of up to
$2.5 billion of our common stock under a stock repurchase program
with no expiration date. During scal 2006, we repurchased and
retired 34,000,000 shares of common stock for $1.5 billion.
At September 24, 2006, approximately $0.9 billion remained
authorized for repurchases under our stock repurchase program,
net of put options outstanding. We will continue to actively
evaluate repurchases under this program.
We declared and paid dividends totaling $698 million, $524 million
and $307 million, or $0.42, $0.32 and $0.19 per share, during scal
2006, 2005 and 2004, respectively. On October 5, 2006, we
announced a cash dividend of $0.12 per share on our common
stock, payable on January 4, 2007 to stockholders of record as of
December 7, 2006. We intend to continue to pay quarterly dividends
subject to capital availability and periodic determinations that
cash dividends are in the best interest of our stockholders.
Accounts receivable increased by 29% during scal 2006.
Days sales outstanding, on a consolidated basis, were 29 days
at September 24, 2006, compared to 30 days at September 25,
2005. The increase in accounts receivable was primarily due to
the increase in revenue in scal 2006 as compared to scal 2005
and the timing of cash receipts for royalty receivables. The change
in days sales outstanding is consistent with the increases in
revenue and accounts receivable.
On January 18, 2006, we completed our acquisition of Flarion,
a developer of OFDMA technology, for approximately $613 million
in consideration, including approximately $229 million in cash.
Upon achievement of certain agreed upon milestones during the
third quarter of scal 2006, we incurred additional aggregate
consideration of $197 million, including approximately $185
million in cash (of which $75 million will be payable in July 2007).
We intend to continue our strategic investment activities to promote
the worldwide adoption of CDMA products and the growth of CDMA-
based wireless data and wireless Internet products. As part of these
investment activities, we may provide nancing or other support to
facilitate the marketing and sale of CDMA equipment by authorized
suppliers. In the event additional needs for cash arise, we may
raise additional funds from a combination of sources including
potential debt and equity issuance.
We believe our current cash and cash equivalents, marketable
securities and cash generated from operations will satisfy our
expected working and other capital requirements for the foresee-
able future based on current business plans, including acquisitions,
investments in other companies and other assets to support the
growth of our business, nancing and other commitments, the
payment of dividends and possible additional stock repurchases.
in QWBS revenue was primarily attributable to a $16 million
increase in equipment revenue, net of a $24 million decrease in
amortization of deferred revenues related to historical equipment
sales, and a $10 million increase in related messaging services
revenue. QWBS shipped approximately 46,800 satellite-based
systems and 62,500 terrestrial-based systems during scal 2005,
compared to approximately 43,400 satellite-based systems and
10,000 terrestrial-based systems in scal 2004.
QWI’s earnings before taxes for scal 2005 were $57 million,
compared to $19 million for scal 2004. QWI’s operating margin
percentage was 9% in scal 2005, compared to 3% in scal 2004.
The increases in QWI earnings before taxes and operating margin
percentage were primarily due to a $39 million increase in QIS
gross margin largely resulting from the increase in fees related
to our expanded BREW customer base and products.
During scal 2005, QWBS completed the process of moving
high-volume, standard product manufacturing to Mexico to reduce
manufacturing costs. The low-volume, prototype and new product
manufacturing activities remain in San Diego.
QSI Segment. QSI’s earnings before taxes from continuing opera-
tions for scal 2005 were $10 million, compared to losses before
taxes from continuing operations of $31 million for scal 2004.
During scal 2005, QSI recorded $101 million in realized gains
on marketable securities and other investments, compared to
$56 million in scal 2004. Equity in losses of investees decreased
by $43 million primarily due to a decrease in losses incurred by
Inquam during scal 2005 as compared to scal 2004, of which
our share was $33 million for scal 2005 as compared to $59 million
for scal 2004. QSI’s earnings before taxes from continuing oper-
ations also included a $42 million increase in MediaFLO USA
operating expenses.
Liquidity and Capital Resources
Our principal sources of liquidity are our existing cash, cash equiva-
lents and marketable securities, cash generated from operations
and proceeds from the issuance of common stock under our stock
option and employee stock purchase plans. Cash and cash equiva-
lents and marketable securities were $9.9 billion at September 24,
2006, an increase of $1.3 billion from September 25, 2005. Our cash
and cash equivalents and marketable securities at September 24,
2006 consisted of $3.8 billion held by foreign subsidiaries with the
remaining balance of $6.1 billion held domestically. Due to income
tax considerations, we derive liquidity for operations primarily from
investments held domestically. Cash provided by operating activities
was $3.3 billion during scal 2006, compared to $2.7 billion during
scal 2005. The increase was primarily attributable to higher net
income (net of non-cash share-based compensation expense) in
scal 2006. Net proceeds from the issuance of common stock
under our stock option and employee stock purchase plans was
$692 million during scal 2006, compared to $386 million during
scal 2005.